LONDON (Commodity Online): Gold prices tumbled last week failing to breach $1700 per ounce levels triggering profit taking amid improving market sentiments, according to Barclays Research.

The solidity of the physical market will set the downside for prices, while buying in China has been strong ahead of the Lunar new year, it will need to be coupled with a pickup in other regions to provide strong support. This week’s FOMC meeting and US non-farm payrolls will be key in setting gold’s price trajectory.

The macro environment remains bullish with uncertainties in USA providing some support while investor inflows appears neutral as exchange traded funds net redemptions amounted ot 4.2 tons lst week, extending the net outflows for the year-to-date to 23.4 tons, Barclays Research said.

“The bulk of the outflows continue to be concentrated in the US listed products. In our view, a slowdown in investor appetite remains a key downside risk for prices. “

Continued high volume on the Shanghai Gold Exchange in December indicates that Chinese gold demand has remained strong ahead of the Lunar new year. Bar premiums in Hong Kong have fallen since last week but remain elevated at $1.40. However, Chinese buying has not been strong enough to offset soft Indian demand. Local prices had fallen to levels last seen in August by the end of the week as the INR strengthened supporting consumption.

The close under 1675 opened up a pullback to range lows, and gold continues to slide to those lows near 1640 where we expect to see a bid materialise. Resistance: 1676, 1696; Support: 1650, 1625, Barclays Research said.

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